Housing Market on 'Steroids,' Author WarnsJune Fletcher of The Wall Street Journal has a book on the way called House Poor: Pumped Up Prices, Rising Rates, and Mortgages on Steroids. She tells Steve Inskeep that navigating a volatile real estate market may require some unconventional thinking.

June Fletcher of The Wall Street Journal has a book on the way called House Poor: Pumped Up Prices, Rising Rates, and Mortgages on Steroids. She tells Steve Inskeep that navigating a volatile real estate market may require some unconventional thinking.

STEVE INSKEEP, host:

On Fridays, our business report focuses on your money. Those who put their money into real estate will be interested to hear that the latest housing statistics suggest the real estate market is still hot, despite warnings from many experts that there's a housing bubble in some local markets. One of those people is June Fletcher. She writes for The Wall Street Journal and is author of a forthcoming book called "House Poor: Pumped Up Prices, Rising Rates, and Mortgages on Steroids." Welcome.

Ms. JUNE FLETCHER (The Wall Street Journal; Author): Thank you.

INSKEEP: You're trying to get people not to get so excited about the real estate market, not to spend quite so much. Why aren't they listening?

Ms. FLETCHER: I think what's happening is people are panicking. They've been hearing so much about housing bubbles bursting that they feel like they absolutely have to, you know, get on the train.

INSKEEP: Are people actually saying, `I've got to buy something now because prices are going to keep going up and up, and I'll never get in the market'?

Ms. FLETCHER: Absolutely. You know, they see houses doubling in value. A good example, I bought a beach place, my dream house, in Naples, Florida, less than a year ago. It's doubled in value. I couldn't afford to buy that same place today. And I think people see that, and they're afraid these house prices are going to go on up forever, and they'll never be able to buy anything.

INSKEEP: Don't want to get you in trouble with your neighbors in Florida, but when people on the same block are buying a house for twice what you paid, are you thinking, `Stupid'?

Ms. FLETCHER: No, I don't think it's stupid, but I do think that you're not going to get that sort of appreciation forever. Now Naples I think is a market that's going to continue to do well simply because it's in the Sun Belt, and you've got 76 million baby boomers who want to retire. But it's not the case in speculative markets, like Las Vegas, for example, you know, where investors are a huge part of the market. Nationally, one out of four home purchases in the last year have been by investors, and that's very scary, because when investors start to pull out of the market, they do it fast.

INSKEEP: What's some advice for people looking to buy a house right now?

Ms. FLETCHER: If you're going to buy a house, really, you need to look at what's going on in that particular market. The most important thing economists look at is job growth. You know, is it a healthy market? You should look at inventory. You should look at sales. You should look at starts and permits. All of this is publicly available information. Are people standing in line, doing overnight camp-outs at model homes? You know, are there bidding wars? It may be sensible, in that case, to wait out the market if it--signs of panic, because you're going to be in a much stronger position if it's a calmer market. Sometimes it makes a lot more sense to rent. For example, in San Francisco, Nob Hill, very tony place, you can rent a one-bedroom place for about $1,300 a month. It'd cost you almost double that to buy it.

INSKEEP: In terms of a mortgage, a monthly mortgage payment.

Ms. FLETCHER: Right, in terms of a monthly mortgage to get the same place. So, you know, in that case, you know, in some markets, it's a real value to rent. And in places like Atlanta, you know, they've giving away a month's free rent, so it's not such a bad idea to rent if you're only going to be in the market for a year or two.

INSKEEP: What's your advice for someone who's thinking about selling at this moment?

Ms. FLETCHER: You know, you should really know where you are in the market. One of the things that realtors say, which is counterintuitive, is that it's often sensible to underprice your house rather than overprice it. You know, everybody gets greedy in these bubblicious times. If you start out with a lower price, first of all, you're going to have--you know, everybody is going to come to your house. You're much more likely to have a bidding war. What happens very often is you suddenly set up an auction situation with your house, and people will actually bid up your price, and so that's actually a pretty good trick for selling your house.

The other thing is don't go crazy with home improvements. Very often, the most effective home improvements are the small ones; for example, you know, just upgrading the hardware on your doorknob, anything people can touch. Paint your front door. That is the first thing people see. Because people make their decisions whether or not to buy in the first 30 seconds. In fact, a recent study came out that said people spend more time picking a video to watch in the evening than they spend touring a home.

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